Higher Education

College Tuition Cost: MSRP vs Discounted Deal

Somewhere, banging about my brain (we’ll call it the annoying-clips-of-movies region) there’s a scene with a woman who has a drawn out accent saying, “I never pay retail.” I imagine her smoking a cigarette and being generally disinterested in both the conversation and the act of smoking. I share this detail, because in the conversation about the costs of college and whether or not college is “worth it,” one thing that seems to get less play is how much college actually costs. There’s a very real sticker shock when parents and students see the price of tuition. If you’re applying to a four-year liberal arts college, tuition may range from $25,000 to $47,000 a year. To simplify things, we’ll average those two numbers into $36,000. Think of tuition as the suggested retail price of a book. I’m currently reading Rachel Kushner’s novel The Flamethrowers. It has an MSRP of $17, but costs $13.60 on Amazon, a cool 20% discount. Colleges and universities may discount tuition anywhere from 20-35%. That $36,000 base tuition may drop to something like $23,500. While tuition has gone up over the years, it’s more of a signal to the marketplace than the actual cost for students and parents. Tamar Lewin compares it to scotch saying, “For decades, most private college pricing has reflected the Chivas Regal effect — the notion that whether in a Scotch or a school, a higher price indicates higher quality.”1 In the article, Lewin documents a trend for some colleges doing away with the discount and reducing tuition to the actual cost. While in my example I used a discount of 35%, Lewin notes that, “Over all, private colleges discounted freshman tuition by 45 percent last year, a new high.” More recently, research has put the actual cost of college, when accounting for earnings over a lifetime, to be -$500,000.23 So, not only is the price of tuition misleading, when placed in the broader context of a student’s lifetime and earning potential, the cost of college could be perceived as far lower than the immediate outlay of tuition.

If you’re a parent of a college student or a college student, how aware are you of discounted tuition and did that factor into your decision?

  1. Lewin, Tamar. “Getting Out of Discount Game, Small Colleges Lower the PriceNew York Times 25 December 2013: Online. []
  2. Autor, David H. “Skills, education, and the rise of earnings inequality among the ‘other 99 percent’”  Science 23 May 2014: 
    Vol. 344 no. 6186 pp. 843-851. Online. []
  3. Leonhardt, David. “Is College Worth It? Clearly, New Data Say” New York Times 25 December 2013: Online. []

Timothy A. Lepczyk

Tim is an instructional technologist and former librarian. On the side, he writes fiction and poetry, and publishes the magazine Scintilla. You can follow him on Twitter at @thirdcoast.

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